India's services PMI eases to 58.9 in October as cost pressures cool

India's services PMI eased to 58.9 in October, marking the slowest expansion since May as competition and heavy rains weighed on growth, while cost pressures receded

India’s services sector growth eased in October, though it remained strong overall, supported by resilient demand and Goods and Services Tax (GST) relief. According to data released by S&P Global, the HSBC India Services Purchasing Managers’ Index (PMI) fell to 58.9 from 60.9 in September, indicating the slowest pace of expansion since May but staying well above the 50-mark that separates growth from contraction. 

Firms surveyed said higher client footfall and GST relief continued to support activity, but competition and heavy rains limited growth momentum. Despite the moderation, the headline index remained comfortably above its long-run average of 54.3. 

Pranjul Bhandari, chief India economist at HSBC, said, “India’s services PMI softened to 58.9 in October, which represented the slowest pace of expansion since May. Competitive pressures and heavy rains were cited as contributors to the sequential slowdown. That said, the services PMI is still running well above the neutral level of 50.0 and its long-run average.” 

 

Input costs increased at the slowest rate in 14 months, which provided some relief for firms, he said. “Meanwhile, India’s composite PMI fell on a sequential basis from 61.0 in September to 60.4 last month, largely due to the slowdown in the services sector,” Bhandari added.   

 

New business growth softest in five months

New business intakes rose sharply but at the weakest pace in five months, as floods and heightened competition weighed on demand. International sales continued to grow, albeit at the slowest rate since March, signalling solid but moderating overseas demand for Indian services.

 

Cost and price pressures recede

The survey showed that input costs rose at the slowest pace in 14 months, with firms citing higher spending on fruits, vegetables, maintenance and construction materials. The GST reform was reported to have helped curb price pressures. Output charges also increased at the slowest rate in seven months, with fewer than 5 per cent of respondents indicating higher prices.   

HSBC India Services Purchasing Managers’ Index (PMI) reflects growth in the country’s services sector

 

Jobs rise slightly as optimism holds firm 

Amid efforts to meet delivery deadlines and maintain service reliability, firms added staff in October. The rate of job creation, however, was modest and among the weakest in 18 months. The increase in hiring helped reduce outstanding workloads for the first time in nearly four years. 

Despite the slowdown, service providers remained confident about future business activity, supported by expectations of stronger demand, advertising and competitive pricing strategies. However, the overall level of optimism slipped to a three-month low, reflecting lingering concerns over competition and weather disruptions.

 

Composite PMI indicates broader moderation

The combined output of India’s manufacturing and services sectors expanded sharply in October, though momentum softened. The HSBC India Composite PMI Output Index dropped to 60.4 from 61.0 in September, its lowest since May. While manufacturers saw faster growth, the slowdown in services activity pulled the overall index lower.